Shiba Inu (SHIB -0.14%) may not be on its way to a 45,000,000% gain like last year. In fact, the popular meme token has declined so far this year. But Shiba Inu gave investors reason to cheer recently when it jumped 45% in just 10 days. And the cryptocurrency has a couple of growth drivers ahead: the launch of its Layer 2 scaling solution and the development of its metaverse project.
Shiba Inu's rally didn't last -- at least this time. The crypto player lost 28% from last month's high point. Considering Shiba Inu's upcoming projects, should you buy on the dip?
Help from the Shib Army
First, a bit of detail about this popular cryptocurrency. How did it make such tremendous gains in the first place? Its loyal community -- the "Shib Army" -- helped push Shiba Inu into the forefront across social media platforms. In fact, the Shiba Inu white paper says the cryptocurrency was designed as an experiment in decentralized community building.
Some cryptocurrency investors bet heavily on Shiba Inu. Even today, the token remains among the top 10 holdings of Ethereum whales, according to WhaleStats.
The big problem with Shiba Inu, though, has been its limited use cases. It's a cryptocurrency running on the Ethereum blockchain. And it's mainly used for payment. All of this is why the latest projects are big news.
Shibarium is the Layer 2 scaling solution under development right now. The plan is for Shiba Inu to migrate to Shibarium. This would eliminate the major challenges it faces on Ethereum right now: congestion and high transaction fees. Shibarium promises fees that are extremely low.
Shiba Inu hasn't set an exact release date for Shibarium. But some reports suggest the public testnet may launch in the third quarter of this year.
The other important Shiba Inu catalyst is the work on its metaverse project. This includes the sale of more than 100,000 plots of virtual land. Land is being released in phases. The first phase, launched this spring, included about 30,000 lots. Landowners may generate passive income, collect resources, and earn rewards within the metaverse world.
A better asset today
The launches of Shibarium and the Shiba Inu metaverse project make Shiba Inu a stronger cryptocurrency player than it was a year ago. Use cases are increasing. And with Shibarium, transactions will be quicker and less costly. So, it's fair to say Shiba Inu looks like a better asset today than it was in the past.
Should you buy Shiba Inu on the dip? In spite of the token's positive developments, I still don't see it as a solid long-term investment, for a couple of reasons. First, even with Shibarium and the metaverse, Shiba Inu doesn't stand out among the thousands of crypto players in existence. So, it may have difficulty maintaining momentum over time.
Second, Shiba Inu's coin supply gets in the way of any major increase in value. The cryptocurrency is making efforts to burn tokens. There's even a burn mechanism within the metaverse. Burning reduces supply, but burning enough to make a difference will take quite a while.
It's possible Shiba Inu will rebound from this latest dip. And positive Shibarium and metaverse news could attract new users and investors. But there are plenty of other cryptocurrency players out there that have more to offer users -- and investors -- over the long term. I would favor those players and steer clear of Shiba Inu right now.